Monthly Archives: August 2008

Apple vs Google

Posted on August 14, 2008 by Felix

Apple is worth more than Google. Huh? This doesn’t make sense to me. Let’s start with the obvious: Google makes more money than Apple does. It had earnings of $10 billion over the past 12 months, compared to $8 billion … Continue reading →

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Laughing at Alan Greenspan

Posted on August 14, 2008 by Felix

I’m no big fan of Alan Greenspan or his pronouncements, especially those where he tries to persuade us that he wasn’t wrong in the past, he was right. There’s a classic example in his latest interview with David Wessel: In … Continue reading →

Posted in fiscal and monetary policy, housing, immigration | Comments Off on Laughing at Alan Greenspan

The Curious Thomson Reuters Share-Price Arbitrage

Posted on August 14, 2008 by Felix

Does anybody out there still believe in the efficient markets hypothesis? If so, I disprove it thus. Thomson Reuters is listed both in the UK and in the US. As CEO Tom Glocer says, "a share in one place is … Continue reading →

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Nassim Taleb and the Ubiquity of Moral Hazard

Posted on August 14, 2008 by Felix

Nassim Taleb would be the first to tell you that the runaway success of his books was an utterly unpredictable black swan event. You might or might not believe him — but in his interview today with Lloyd Grove, there’s … Continue reading →

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Selling Iowa’s Pollock

Posted on August 13, 2008 by Felix

After the University of Iowa was severely damaged by floods in June, a novel way of paying for the damage was mooted: selling Mural, the great Pollock in the university’s art museum. It didn’t take long for arts blogger Tyler … Continue reading →

Posted in art | 1 Comment

Keeping Your Eggs in Many FDIC-Insured Baskets

Posted on August 13, 2008 by Felix

The Grouse is hearing portentious rumblings: I am told that a loan trader at one investment bank is all in cash and has his wife running around opening savings accounts at various banks so that his money will be covered … Continue reading →

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Extra Credit, Wednesday Edition

Posted on August 13, 2008 by Felix

Statistics, damned statistics and value added: John Kay on the uselessness of many official statistics. Insolvent versus profoundly insolvent – Fannie Mae Part II: "If the shortfall at Fannie is more than 78 billion then Fannie is ‘profoundly insolvent’. It … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Wednesday Edition

Money-Market Datapoint of the Day

Posted on August 13, 2008 by Felix

Vikas Bajaj reports: Money market funds, the short-term cash alternatives, grew to $2.9 trillion in June, up from $2.1 trillion a year ago, according to Crane Data. Those funds, in turn, have more than tripled their holdings of Treasuries and … Continue reading →

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Pulchritude Datapoint of the Day

Posted on August 13, 2008 by Felix

Steve Levitt reports: Mixed-race kids do have one advantage over white and black kids: the mixed-race kids are much more attractive on average. The paper quantifies: Mixed race adolescents are rated as .41 standard deviations more attractive than white children, … Continue reading →

Posted in demographics | 1 Comment

Pandit: Still Going in Circles

Posted on August 13, 2008 by Felix

Gary Weiss profiles Vikram Pandit in this month’s magazine, and his conclusion seems spot-on: What Citigroup needs now is not a wannabe Sandy Weill but someone with the elusive qualities needed to revive the banking giant from its slump. Pandit’s … Continue reading →

Posted in banking, leadership | 1 Comment

Quantitative Finance Soundbite of the Day

Posted on August 13, 2008 by Felix

Paul Wilmott on the problems facing the world of quantitative finance: Banks and hedge funds employ mathematicians with no financial-market experience to build models that no one is testing scientifically for use in situations where they were not intended by … Continue reading →

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SUV Inventories: Up, or Down?

Posted on August 13, 2008 by Felix

When the NYT decides to run a major article on demand for SUVs on the front page of its business section, would it be too much to ask for some actual numbers, rather than one far-from-clear ratio and a handful … Continue reading →

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The Short-Selling Ban: A Post-Mortem

Posted on August 13, 2008 by Felix

Floyd Norris gets out his calculator this morning and crunches some numbers on short-selling and stock performance during the now-expired period when the SEC banned naked shorting of 19 financial stocks. As you might expect, there aren’t any obvious conclusions. … Continue reading →

Posted in regulation, stocks | 3 Comments

Carl Icahn: Hitting His Stride

Posted on August 13, 2008 by Felix

It famously took four months for Carl Icahn to even start blogging, after announcing the launch of the Icahn Report in February. So the fact that he now seems to be getting into his stride after only two months is … Continue reading →

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Extra Credit, Tuesday Edition

Posted on August 12, 2008 by Felix

Reflections on Alt-A: A must-read from Tanta. "If subprime was supposed to be about taking a bad-credit borrower and working him back into a good-credit borrower, Alt-A was about taking a good-credit borrower and loading him up with enough debt … Continue reading →

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Falling Stocks: Cheap, or Cursed?

Posted on August 12, 2008 by Felix

John Hempton emails with an insight about Bill Miller: Buying a stock when it falls precipitously is selling volatility. This helps explain Miller’s outperformance over the course of the Great Moderation: by doubling down on his losers, he was selling … Continue reading →

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The Risky World of Argentine Debt

Posted on August 12, 2008 by Felix

For all that commodity prices might be falling right now, they’re still very high — which is good news for Argentina and its current account. Since its disastrous default and devaluation in 2001, the Land of Silver has managed to … Continue reading →

Posted in bonds and loans, emerging markets | Comments Off on The Risky World of Argentine Debt

When Bill Met Freddie

Posted on August 12, 2008 by Felix

On December 31, Freddie Mac shares were worth $34.07 apiece, and Bill Miller owned 15 million of them. By March 31, Freddie Mac shares had fallen 25% to $25.32 each, and Bill Miller owned 50 million of them. As of … Continue reading →

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Frank Quattrone, Whiner

Posted on August 12, 2008 by Felix

Frank Quattrone made his fortune by taking Silicon Valley startups public during the dot-com boom. Even at the time many awkward questions were asked: weren’t most of these companies too small and too young and too unprofitable for a full-scale … Continue reading →

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Commuting Datapoint of the Day

Posted on August 12, 2008 by Felix

Matthew Garrahan reports on the housing bust in Merced, California: Like Stockton and Modesto, Merced is within commuting distance of San Francisco and the Bay Area, which made it appealing to investors. Some numbers from Google Maps: Merced, CA to … Continue reading →

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Regulate All Lenders

Posted on August 12, 2008 by Felix

George Soros lays out his plan for fixing the US mortgage system in the FT today: essentially, it’s a Demark-style covered-bond system which imposes extremely rigorous regulation and homogenization on all mortgage lenders. Under his preferred system, says Soros, "loan-to-value … Continue reading →

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Why UBS’s Wealth Management Should Stand Alone

Posted on August 12, 2008 by Felix

When I saw yesterday that UBS private-banking clients were expected to have withdrawn SFr5 billion from their accounts last quarter, I said the number seemed low to me. Amazingly, I was right: Rich clients at UBS’s wealth management units withdrew … Continue reading →

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Extra Credit, Monday Edition

Posted on August 11, 2008 by Felix

Lessons Learned From A Dangerous Year: "For fixed-income investors, what matters most is not the return on your money, it’s the return of your money." What Bill Gates really means by creative capitalism: An elegant piece from Martin Wolf. Crisis … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Monday Edition

Eat Roo

Posted on August 11, 2008 by Felix

In case you wanted another reason to eat kangaroo rather than beef: they emit just 0.003 tonnes of greenhouse gases per animal per year, compared to 1.67 tonnes per cow per year. And they don’t just save in terms of … Continue reading →

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Bear Stearns Conspiracy Watch: Bloomberg Piles On

Posted on August 11, 2008 by Felix

The latest journalist to start waxing conspiratorial about the collapse of Bear Stearns is Gary Matsumoto of Bloomberg. He’s looking at options trades which he reckons are very suspicious: In a gambit with such low odds of success that traders … Continue reading →

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